Infonetics: Internet content providers a growing market for optical gear

March 28, 2008

MARCH 28, 2008 -- A new report from market analyst firm Infonetics Research shows that the amount of money Internet content providers (ICPs) like Google, YouTube, and MySpace spent on optical network hardware worldwide hit $204 million in 2007, and is expected to increase steadily over the next 5 years.

MARCH 28, 2008 -- A new report from market analyst firm Infonetics Research (search for Infonetics) shows that the amount of money Internet content providers (ICPs) like Google, YouTube, and MySpace spent on optical network hardware worldwide hit $204 million in 2007, and is expected to increase steadily over the next 5 years.

The report, Optical Network Hardware by Vertical Market, says 86% of the 2007 $13.9 billion optical hardware market comes from service providers, with the bulk coming from incumbent telcos and mobile operators. However, increasing amounts are coming from competitive telcos, cable operators (particularly MSOs in North America), and ICPs.

The remaining 14% of the global market comes from non service providers, with the majority of that share coming from the top 4 verticals: government, finance, utilities, and education and research.

"Service provider investment in optical hardware is being driven by IP network transformations, business services, residential triple play, and mobile backhaul. Non service provider verticals, which represent roughly 1 of every 7 dollars invested in optical equipment, buy mostly metro WDM equipment, driven mostly by the need for high capacity, highly available storage extension, data center interconnection for businesses, and secure transmission," said Michael Howard, principal analyst at Infonetics Research.

Other highlights from the report include:

ICP spending on optical network hardware is forecast to jump 61% in the 6 years between 2006 and 2011.

Nearly all optical long-haul equipment and metro optical SONET/SDH hardware is purchased by service provider verticals.

The government vertical represents roughly a quarter of all optical network hardware spending among non-service providers.

In 2007, 36% of all optical network hardware revenue came from EMEA, 34% from North America, 25% Asia Pacific, and 6% CALA.

Infonetics' report provides worldwide and regional market size, forecasts, and analysis for WDM and SONET/SDH optical network gear used in metro and long-haul networks, broken into five service provider verticals (incumbent telco and mobile operators, competitives, cable operators, ICPs, and other), and eight non-service provider verticals (education and research, government, finance, healthcare, media and entertainment, transportation, utilities, and other).

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